Are Layoffs Coming? What to Expect and How to Prepare
Layoffs are already happening and will continue through 2026, though likely at reduced intensity compared to 2025’s peak of 1.17 million announced job cuts. Economic projections from the Federal Reserve, IMF, and major financial institutions forecast 2026 unemployment around 4.4% to 4.5% with modest GDP growth near 2%, indicating a weaker labor market than 2022-2023 but far from recession-level conditions. Workers should expect ongoing layoffs concentrated in technology, government, retail, and positions vulnerable to AI automation, with the overall pace potentially moderating as pandemic-era over-hiring corrections complete.
Are Layoffs Still Happening? The Current State
Through November 2025, U.S. employers announced 1.17 million job cuts, representing a 54% increase over the same period in 2024 and marking the highest level since the pandemic. This total ranks as only the sixth time since 1993 that announced layoffs exceeded 1.1 million before year-end, with previous occurrences in 2001, 2002, 2003, 2009, and 2020—nearly all recession years.
November 2025 Snapshot
November alone saw 71,321 announced layoffs, down 53% from October’s 153,074 but up 24% compared to November 2024. This represents the highest November figure since 2022, confirming that workforce reductions remain elevated despite month-to-month volatility.
The Full Employment Picture
Beyond headline announcements, Bureau of Labor Statistics data reveals the structural reality of U.S. labor markets. Monthly Job Openings and Labor Turnover Survey reports consistently show 1.5 to 2 million layoffs and discharges each month as part of normal labor market churn—totaling over 20 million separations annually even in healthy economic periods.
The key distinction: 2025’s extraordinary wave comes from concentrated, announced corporate and government reductions rather than solely from typical business closures and position eliminations.
Current unemployment: The unemployment rate stood at approximately 4.4% in late 2025, elevated from the 3.5% to 3.7% range of 2022-2023 but far below recession levels typically exceeding 7% to 8%.
Are Layoffs Increasing? Comparing Recent Years
Three-Year Trajectory
2023: 721,677 announced job cuts—the highest total since 2020 but still below traditional recession peaks
2024: Approximately 761,000 announced cuts through November, representing modest escalation
2025: 1.17 million announced cuts through November, a clear acceleration and the fifth-highest annual total in over three decades
Sector-Specific Increases
Technology: Approximately 153,500 layoffs through November 2025, up 17% compared to 2024. Major tech companies continued streamlining operations following pandemic-era expansion.
Retail: Layoffs increased 139% year-over-year as physical stores closed and e-commerce operations optimized for profitability rather than growth.
Telecommunications: Job cuts surged 268% versus 2024, with major carriers restructuring legacy operations and investing in infrastructure automation.
Federal Government: An estimated 300,000 positions eliminated across federal agencies in 2025 through Department of Government Efficiency initiatives and various reorganization efforts—the single largest contributor to the year’s elevated totals.
AI-Related Reductions: Approximately 54,700 layoffs explicitly attributed to artificial intelligence and automation in 2025, with 6,280 in November alone, predominantly affecting technology and telecommunications sectors.
The data confirms that layoffs are not just increasing—they’re accelerating in specific industries while remaining concentrated rather than economy-wide.
Are Layoffs Coming in 2026? Economic Projections
Multiple authoritative sources provide frameworks for understanding 2026 labor market conditions, though precise layoff predictions remain impossible.
Federal Reserve Outlook
The Federal Open Market Committee’s median projection forecasts unemployment at 4.4% for 2026, essentially unchanged from 2025’s 4.5% estimate. The Fed characterizes this as slightly above the long-run natural rate of approximately 4.2%, suggesting modest labor market softening without crisis-level deterioration.
International Monetary Fund Assessment
The IMF’s October 2025 World Economic Outlook projects U.S. GDP growth at 2.0% for 2025 and 2.1% for 2026—representing slight deceleration but not contraction. This growth trajectory typically supports employment stability rather than massive job destruction.
Private Sector Forecasts
Goldman Sachs: Projects 2026 growth between 2.0% and 2.5% with unemployment “moderately above” current 4.4% levels but well below recession thresholds.
S&P Global and RSM: Anticipate growth around 2.0% to 2.2% through 2026 with mild unemployment increases to approximately 4.5%, consistent with soft landing scenarios.
Philadelphia Federal Reserve Survey of Professional Forecasters: Expects median unemployment of 4.2% in 2025 rising to 4.5% in 2026—gradual weakening rather than collapse.
What This Means for Layoffs
These projections suggest that 2026 will see continued workforce reductions, but likely at lower intensity than 2025’s extraordinary levels. The consensus indicates:
- Ongoing job cuts as normal business operations
- Sector-specific reductions in areas facing structural challenges
- Fewer massive, headline-grabbing layoff announcements compared to 2025
- Possible range of 600,000 to 900,000 announced cuts if economic projections hold
However, any significant economic shock—financial crisis, trade war escalation, unexpected recession—could push totals higher.
Why Layoffs Will Continue: Five Key Drivers
1. End of Post-Pandemic Labor Hoarding
During 2021-2022, many employers retained workers despite slower demand, fearing they couldn’t hire when growth returned. As 2025 demonstrated, this defensive posture reversed. Companies now feel comfortable reducing headcount, knowing candidate availability has improved significantly.
Economic analysis suggests the labor market is transitioning from “no hire, no fire” (freezing everything) to “no hire, more fire” (selective cuts while avoiding new positions). This pattern typically extends 12 to 18 months before stabilizing.
2. AI and Automation Acceleration
The 54,700 explicitly AI-related layoffs in 2025 likely understate technology’s full impact, as many companies restructure roles without citing automation directly. McKinsey and similar consultancies project that generative AI will substantially affect 25% to 30% of current work activities within three to five years.
Most vulnerable positions:
- Customer service and support (Level 1 technical support, call centers)
- Data entry and basic administrative tasks
- Content moderation and initial review processes
- Certain marketing and copywriting functions
- Routine financial analysis and reporting
Organizations implementing AI solutions typically see 12 to 24-month windows between technology deployment and workforce adjustments, suggesting 2026 cuts will reflect 2025 investments.
3. Weak Employment Growth Projections
Capital Analytics Associates reports that Wall Street Journal survey data forecasts employment growth averaging only 15,000 to 49,000 jobs monthly through 2026—dramatically below historical norms of 150,000 to 200,000 monthly additions during healthy expansions.
This anemic hiring environment means companies facing any revenue pressure default to cuts rather than reducing hiring plans, as few expansion plans exist to scale back.
4. Continued Public Sector Adjustments
While federal workforce reductions dominated 2025 headlines, many announced changes won’t fully execute until 2026. Additionally, state and local governments facing budget pressures may implement their own efficiency initiatives, contributing to overall layoff numbers.
5. Investor Pressure for Profitability
Public company shareholders increasingly demand margin improvement and cost discipline over revenue growth, particularly in technology and consumer sectors. This creates persistent pressure for workforce “optimization” regardless of absolute profitability levels.
Companies announcing layoffs often see stock price increases, reinforcing the behavior even when fundamental business performance remains acceptable.
Factors That Could Limit 2026 Layoffs
Several dynamics may prevent 2026 from matching or exceeding 2025’s levels:
Positive Growth Projections
Unlike 2008-2009 or early pandemic periods, major forecasting institutions expect positive GDP growth. Recessions drive mass layoffs; modest expansions typically don’t.
Political and Public Backlash
The scale of 2025 federal workforce reductions generated significant controversy. Political costs may limit appetite for additional massive government cuts, removing one of 2025’s largest contributors.
Relatively Tight Labor Markets
Unemployment at 4.4% to 4.5% remains near historical lows. Many industries still report difficulty finding qualified candidates for specialized positions, particularly in healthcare, skilled trades, and certain technology roles. This persistent tightness discourages aggressive cutting.
Completion of Pandemic Correction
Many companies executed multi-year workforce normalizations throughout 2023-2025. Once organizations reach sustainable staffing levels aligned with realistic growth expectations, the pressure for additional cuts diminishes.
Demographic Shifts
Baby Boomer retirements continue removing workers from the labor force, creating natural headcount reductions without formal layoffs. Some organizations may rely on attrition rather than cuts to reach target staffing levels.
How Many Layoffs in 2026? What We Can Predict
No organization publishes official 2026 layoff forecasts, making precise predictions impossible. However, historical context provides reasonable ranges:
Historical Comparison Framework
Recession years (2001-2003, 2008-2009, 2020): 1.14 million to 2.23 million announced cuts annually
Strong economy years (2015-2019): 300,000 to 500,000 announced cuts annually
Transition years (2023-2024): 721,000 to 761,000 announced cuts
Current wave (2025): 1.17 million announced cuts (near recession levels despite no technical recession)
2026 Scenario Analysis
Optimistic scenario: Economic growth accelerates, federal cuts complete, AI creates more roles than it eliminates → 400,000 to 600,000 announced cuts (normal range)
Base case scenario: Projections hold, modest weakening continues, selective sector cuts persist → 650,000 to 850,000 announced cuts (elevated but below 2025)
Pessimistic scenario: Unexpected recession, additional government reductions, AI displacement accelerates → 1.0 million to 1.3 million cuts (matching or exceeding 2025)
Most economists’ projections align with the base case scenario—continued layoffs above historical norms but declining from 2025’s peak.
When Will Layoffs Stop? Reading the Signals
Layoffs never truly “stop” in dynamic labor markets, but the current elevated wave will end when specific indicators align:
Signal 1: Monthly Announcements Normalize
When Challenger, Gray & Christmas reports show sustained monthly totals below 50,000 for several consecutive months (compared to current 71,000), it indicates the extraordinary wave has passed. Historical averages during strong economies run 30,000 to 45,000 monthly.
Signal 2: Unemployment Stabilizes
The unemployment rate needs to plateau or decline rather than continuing gradual increases. Stabilization around 4.0% to 4.2% for three to four quarters typically marks labor market equilibrium.
Signal 3: Hiring Plans Rebound
Challenger also tracks announced hiring plans, which fell to approximately 497,000 positions for all of 2025—the lowest since 2010. When planned hiring returns to 800,000+ annually, it signals renewed confidence and reduced layoff pressure.
Signal 4: Sector-Specific Recoveries
Technology, telecommunications, retail, and government sectors driving current cuts need to show improved fundamentals—revenue growth, stable budgets, completed restructurings—before cutting pressures ease in those industries.
Signal 5: AI Stabilizes as Net Job Creator
When companies announce new AI-enabled positions (prompt engineers, AI trainers, system implementers) at rates exceeding AI-driven eliminations, the technology transitions from displacement threat to growth driver.
Realistic timeline: If economic projections hold, these signals could align by late 2026 or early 2027, suggesting 18 to 24 months from late 2025 before layoff activity returns to truly normal levels.
Preparing for Continued Uncertainty
Understanding that layoffs will continue through 2026 enables strategic career planning rather than reactive crisis management.
Build Recession-Resistant Skills
Focus professional development on capabilities that remain valuable regardless of economic conditions:
- Leadership and team management
- Strategic problem-solving and analysis
- Revenue generation and business development
- Specialized technical expertise in growing fields
- Cross-functional project management
Maintain Financial Cushions
With weakening labor markets extending job search timelines, emergency savings become increasingly important. Aim for three to six months of expenses in accessible accounts, particularly if your industry faces elevated layoff risk.
Network Continuously
Professional relationships prove most valuable during transitions. Maintain connections with former colleagues, industry peers, and executive recruiters rather than networking only when actively searching.
For senior professionals and executives, specialized recruiters understand market dynamics and connect candidates with organizations actively building teams despite broader economic uncertainty. Dimensional Search’s network of executive search consultants focuses on C-suite and senior leadership placements across industries, helping experienced professionals navigate transitions strategically.
Consider Alternative Career Paths
Some professionals use layoff uncertainty to evaluate entrepreneurship, consulting, or franchise opportunities offering greater control over income and career direction.
For recruiting and HR professionals, executive search provides a path to building independent practices while leveraging existing expertise. Dimensional Search offers franchise opportunities with proven systems, comprehensive training, and national network support for professionals ready to establish their own retained search businesses. Explore franchise opportunities in executive recruiting.
Frequently Asked Questions
Are mass layoffs coming in 2026?
Economic projections suggest continued layoffs but likely at reduced intensity compared to 2025. The Federal Reserve, IMF, and private forecasters expect modest GDP growth (2.0% to 2.1%) with unemployment around 4.4% to 4.5%—conditions that typically support employment stability rather than mass destruction. However, “mass layoffs” will continue in specific sectors facing structural challenges like retail adaptation, technology optimization, and ongoing government efficiency initiatives.
Will there be more layoffs than in 2025?
Most expert projections indicate 2026 layoffs will total less than 2025’s extraordinary 1.17 million announced cuts, though remaining elevated above historical averages of 400,000 to 500,000 during strong economies. The base case scenario forecasts 650,000 to 850,000 announced cuts—still significant but declining from 2025’s peak as pandemic-era over-hiring corrections complete and federal workforce reductions finish executing.
What industries face the highest layoff risk in 2026?
Technology companies continuing AI integration and profitability optimization face ongoing risk, particularly in customer support, content moderation, and administrative functions. Retail businesses adapting to e-commerce dominance will likely continue store closures and distribution center consolidations. Telecommunications companies automating infrastructure and legacy operations remain vulnerable. Federal and potentially state government agencies may see additional efficiency-driven reductions. Conversely, healthcare, skilled trades, and specialized technology roles show relative stability.
Can the Federal Reserve prevent layoffs in 2026?
The Federal Reserve influences layoff patterns through monetary policy affecting borrowing costs, investment, and economic growth. Interest rate reductions can stimulate hiring and reduce layoff pressures by making expansion capital more accessible. However, the Fed balances multiple objectives including inflation control, and interest rate changes take 12 to 18 months to fully impact employment. The Fed’s current projections suggest they expect labor market softening but not crisis requiring aggressive intervention.
Should I look for a new job preemptively in 2026?
The decision depends on your individual situation, industry, company health, and career goals. If you work in sectors showing elevated layoff concentrations (technology, retail, telecommunications) or for companies announcing restructuring plans, proactive searching may provide more negotiating leverage and better opportunities than reactive job hunting after layoffs. However, if you’re in stable industries with solid company performance, unnecessary job changes carry their own risks. Maintain updated resumes and active networks regardless.
How long will it take to find a job if laid off in 2026?
Historical data shows median unemployment duration around 10 weeks (2.5 months) with averages closer to 24 weeks (6 months). However, weaker labor markets typically extend search timelines. With 2026 forecasts showing minimal job creation (15,000 to 49,000 monthly additions), competition for open positions will remain intense. Budget for 3 to 6-month searches for professional positions, potentially longer for senior executives and specialized roles. Working with executive recruiters can accelerate placement timelines for experienced professionals.
When will the labor market return to normal?
“Normal” depends on your definition, but historical patterns suggest stabilization when unemployment plateaus around 4.0% to 4.2%, monthly layoff announcements consistently fall below 50,000, and hiring plans rebound above 800,000 annually. If current economic projections hold, these conditions could align by late 2026 or early 2027. However, structural changes from AI adoption and remote work normalization mean the labor market may not return to pre-2020 patterns but rather establish a new equilibrium.
Taking Control in Uncertain Times
The 2026 labor market will challenge workers and employers alike, but understanding layoff patterns and economic projections enables strategic planning rather than fearful reactions. While workforce reductions will continue, they’ll likely occur at declining intensity as the economy finds new equilibrium.
Focus on controllables: Skill development, financial preparation, network maintenance, and strategic career positioning matter more than attempting to predict precise layoff timing or quantities.
For professionals navigating transitions or seeking greater career control, executive search and recruiting offer stable career paths serving consistent demand for senior leadership talent. Dimensional Search provides comprehensive support for professionals establishing independent search practices through our franchise network, combining 60 years of proven methodology with modern technology and training. Learn about building your executive search career.
For companies seeking senior talent during market uncertainty, working with experienced executive recruiters ensures access to qualified candidates despite tighter labor markets. Dimensional Search’s network of 65+ independently owned offices specializes in retained search for C-suite executives, senior leaders, and experienced professionals across industries. Start your executive search today.